You’ve built your company from the
ground up, business is good and
retirement is at least 15 years in the future. There will be plenty of time for
investment and estate planning down the
road, right? Wrong!
“There are barriers that exist between
people with money to invest for the future
and a sound investment plan,” says Dick
Wiesner, senior business relationship manager with Wells Fargo Bank.
Smart Business asked Wiesner about
the best time to plan for the future of your
estate and who should help you do it.
What barriers exist that keep people from
taking charge of their investments?
There are three reasons why people don’t
get around to tackling this task. First, they
are very busy running their company.
Second, there is the denial of an immediate
need for estate or financial planning.
Embedded within this rationale is a fear of
death. These people refuse to acknowledge their mortality.
Third is a fear of the unknown. Many business owners recognize that to engage in this
activity they will have to make critical decisions and the discussions surrounding these
decisions may reveal their lack of knowledge in this area. Business owners are most
comfortable when they are fully knowledgeable about topics being discussed and
when they are ‘in charge’ of events.
So, what are the advantages of being proactive
with your estate and investment planning?
One of the biggest initial advantages of
engaging an investment planner is that it
will assist you in consolidating all your
records. Typically, most individuals have a
variety of investments already in place.
They may have several 401(k) plans from
prior employers, plus stock or other investments with brokers they have met over the
years. They may own mutual funds or even
annuities from different fund families from
investment decisions they made many
years ago. In short, their financial records are scattered and no unifying plan exists to
get them where they will want to be when
retirement is at hand.
The second advantage to retaining a qualified financial planner is that it will remove
emotions from the investment decision
process. Once a plan is formulated and
implemented you will be at peace with having tackled this task. You won’t be a victim
of poor timing, selling when the stock market goes down and buying when it shoots
up like a rocket. This becomes especially
important as one gets closer to retirement
age. You can make a financial mistake in
your 30s, but when you are over 50 years of
age you don’t have time to recover from a
major financial error.
There are many resources to assist you
with this task, including independent financial planners both large and small, traditional brokerage houses and financial institutions, such as Wells Fargo, which is the
12th largest manager of investment funds
in the U.S.
How do you decide which one to use?
First, decide exactly what you want to
accomplish. Are you simply going with an investment adviser who will make money
for you and protect it from extreme fluctuations? Or is your expectation that, in addition to investment advice, you want help
with estate planning.
A second factor to consider is the adviser’s investment track record and what fees
will be charged. The trick is to understand
all the fees you will be paying. Be aware
that many fees are hidden. For example, if
your adviser purchases bonds for you
there is often a large spread between what
they buy the bonds for and what you are
charged. Also, you should ask if you will be
charged additional brokerage fees for any
assets purchased. Bottom line on cost is to
not be misled. If you are paying what at
first glance seems to be a high cost, say
1.25 percent of assets managed, further
analysis might reveal this to be very reasonable if other ancillary services are
offered, trading fees are waived and the
adviser has an above-average track record.
Another key is to conduct personal interviews with potential advisers and bring
along your spouse. You must feel a sense of
comfort and security from the adviser you
choose. Another element to consider is
whether the adviser selects investments
from an ‘open platform,’ meaning will they
choose products from any and all sources
to fit your needs.
A strength within the Wells Fargo Wealth
Management Group is it operates from an
‘open’ platform, selecting products from
any sources that best fit client needs.
A final key point to consider is to know
expectations concerning how often you
will meet personally with the adviser to
update plans and discuss results.
DICK WIESNER is senior business relationship manager with
Wells Fargo Bank. Reach him at [email protected]
or (713) 209-6703.